This article was written before Biden announced the loan forgiveness executive order.

Quick Summary

With millions of baby boomers approaching retirement age and thereby leaving the workforce, the Public Service Loan Forgiveness Program (PSLF) was created to increase the applicant pool for government and non-profit jobs.   PSLF is a federal program designed to provide an incentive to attract job seekers to employment in much needed, but often lower paying, service work. A component of the 2007 bipartisan College Cost Reduction and Access Act, PSLF  promised to forgive the outstanding federal student loan debt for qualified  workers who have made 120 monthly payments. However, the program was created without a clear, long term plan for implementation.  With legislative and executive branch turnover, problems arose.

2017 was the first year that individuals could have completed 120 qualifying payments.  While the program promised that student debt would be erased after a decade of payments and qualifying employment, 99% of those who initially applied were deemed ineligible, according to a 2019 report from the Government Accountability Office (GAO). Of program applicants from the Defense Department alone, 94% were denied by the Education Department, the GAO found in an April report. For example, a “60 Minutes” report broadcast recently found that of the nearly 180,000 active-duty members with federal student loans, just 124 were approved for debt forgiveness. Some of the issues included insufficient months of qualifying work and confusion around program requirements, including qualifying loans, repayment plans, and the actual payment terms themselves. Public dissatisfaction with the program grew each year as it continued to produce less than stellar or promised results.

The Education Department acknowledged the program has fallen short of its pledge to public and non-profit workers and began an overhaul to “restore the promise” of student loan forgiveness. In 2018, in an effort to set things rights, Congress appropriated $700 million for what was called Temporary Expanded Public Service Loan Forgiveness (TEPSLF).  This program expand PSLF for certain borrowers who were unknowingly on unqualifying repayment plans, most commonly  the balance based graduated or extended plans.  Although this was a start, it still did not have any significant impact. However, on October 6, 2021 the U.S. Department of Education announced the PSLF Waiver. As the name implies, the Waiver, which is set to expire on October 31, 2022, waives many of the original qualifying requirements.  For a limited time, payments made under the wrong loan type, payments made late, and payments made prior to a new consolidation all count. Additionally, educators who receive teacher loan forgiveness can count their qualifying time towards PSLF, and active-duty service members can count months of deferral or forbearance toward their 120 qualifying payments. The Biden administration estimates the PLSF Waiver will benefit more than 550,000 teachers, members of the military, first responders and government employees.  These changes are significant.

Key Insights

If this works as planned, the results will be big! As of January 2022, more than #1.7 billion of federal student loan debt has been forgiven or canceled for individuals providing a public service. It is expected that over the next year, more than one-half million borrowers could benefit from the temporary changes. Additionally, the Biden administration also plans to match Department of Education data with information from other federal agencies to automatically help U.S. workers access loan forgiveness and will review denied applications to identify and correct errors in loan-cancellation processing. Although some of the new rules appear to be less complicated, the program still creates a lot of questions. Additionally, there is still a lot of miss-information or myths floating around the general public mindsets. So, if you have clients, who may still be dealing with their student loans, and they work for any level of government or 501(c)3 non-profit, the most important nuances are noted below:

New Rules for Qualifying Payments

Under the new, temporary rules of the PSLF Waiver, any prior payment on Direct, FFEL, or Perkins Loans will now qualify.  Payments on the latter two had previously been excluded.   Payments made on any repayment plan, and even late and partial payments will be counted.  However, borrowers continue to need qualifying employment. This change will apply to student loan borrowers with Direct Loans, those who have already consolidated into the Direct Loan Program (DL), and those who consolidate into the Direct Loan Program by Oct. 31, 2022. This means, borrowers who were in the old Federal Family Education Loan Program (FFLE), and have qualifying employment should consider, consolidation into DL program.  Periods of repayment on parent PLUS loans are not eligible under the limited PSLF waiver, unless they had been previously consolidated with other eligible loans into Direct loan.

Requirements to receive additional qualifying payments:

Full-time Employment

Borrowers must have worked full-time (30 hours per week or more), or combined full-time for one or more qualifying employer during the calendar month they were also in repayment on their loans. Borrowers can receive credit only for periods of repayment after Oct. 1, 2007, since that is when the PSLF Program began. If they haven’t already, your clients/borrowers must file a Public Service Loan Forgiveness (PSLF) & Temporary Expanded PSLF (TEPSLF) Certification & Application (PSLF form) for any period for which they may receive additional credit toward PSLF. Also, under this temporary provision, your clients do not have to be employed by a qualifying employer at time of application to have their loans forgiven, as long as they have already met the 120 month requirement.

Loan Consolidation

If your clients/borrowers have FFEL loans, Federal Perkins Loans, or other types of federal student loans that are not Direct Loans (e.g., those from older loan programs, such as Federally Insured Student Loans [FISL] or National Defense Student Loans [NDSL]), they must consolidate those loans into the Direct Loan program by Oct. 31, 2022. Client tip: They can log in to Aid Summary to find out how many and what types of loans they have.

There are other options for loan forgiveness for those without PLSF qualifying employment.  Income driven repayment plans have maximum payment terms ranging from 20-25 years. At the conclusion of the loan terms, the balance is forgiven.  Unlike PSLF, however, balances forgiven are treated as taxable income.

My Aha Moment, by Jacquie

Again, if this works as planned, it will be big!

There was a lot of talk during and since the last election cycle about PSLF, as well as student loan forgiveness in general. My ears perked up throughout, but the one point I kept hearing—which damped my hopes was—President Biden noting that he didn’t have the authority to do blanket loan forgiveness, or to make changes to the existing PSLF—this had to be accomplished via Congress. I am certain that I am not alone–my faith in Congress over the last few years has decreased, and I didn’t have any real hopes of anything changing. However, I must say that I think the recent approach of U.S. Department of Education and the Biden administration using the HEROS Act of 2003, which was already approved by Congress and provide the President with the authority to “waive or modify any statutory or regulatory provision applicable to federal student loans under the Higher Education Act, as the Secretary deems necessary” during a declared national emergency, such as a pandemic or war, was brilliant. The Biden administration just launched this new page to help spread the word about the limited waiver: Public Service Loan Forgiveness – The White House. This action is an effective way to honor the promises made to millions of public sector workers almost two decades ago.

My Aha Moment, by Dorothy

There was a lot of talk during and since the last election cycle about PSLF, as well as student loan forgiveness in general.  Widespread student loan forgiveness is fraught with legal, political, and ethical problems.  While there has been pressure on the current president to use executive order to indiscriminately cancel outstanding student loans, constitutionally, Congress controls spending. Attempting to circumvent the legislative checks and balances process is likely to result in legal action. On the policy front, forgiveness retroactively turns billions of dollars owed to our government into grants, reversing earlier legislation.  I also question the societal benefit to general student loan forgiveness.  Even if loan forgiveness was capped at $10,000 per borrower, the cost to taxpayers would be $373 billion but only about 25% of the benefit would go to the lowest third income earners.  To put that in perspective, the US has spent about that much on welfare and less than that on school lunches cumulatively since 2000.  Finally, blanket student debt forgiveness is unfair to those who sacrificed to pay their obligations, or who opted to work a trade or enter the military rather than accumulate student debt. Forgiveness would do nothing to alleviate the high cost of education or better prepare individuals for successful careers.  Smaller steps, such as eliminating interest capitalization, better funding early education, and further expanding the Pell Grant program would be more equitable solutions and still promote individual responsibility.

Conversation Starter question….

This program is effective until October 2022. How do you plan to spread the word to your clients and to your community?

Education Department proposes rule changes on student loans (

GAO-19-717T, PUBLIC SERVICE LOAN FORGIVENESS: Opportunities for Education to Improve Both the Program and Its Temporary Expanded Process

Public Service Loan Forgiveness: DOD and Its Personnel Could Benefit from Additional Program Information | U.S. GAO

Public Service Loan Forgiveness Limited Waiver Opportunity | Federal Student Aid

Written by: Dorothy Nuckols, MPH, AFC Family and Consumer Sciences Educator, University of Maryland Extension and Jacquie Carroll, EdD, AFC Director, Program Evaluation, AccessLex Institute Center for Education and Financial Capability

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